The Congress has turned the heat on the CBI and the Enforcement Directorate for failing to take any action against Jatin Mehta — a fugitive diamantaire with family ties to the Adanis.
Mehta had disappeared from the country sometime in 2013 leaving a trail of unpaid debts worth Rs 6,800 crore.
On Wednesday, Congress spokesperson Supriya Shrinate slammed the Modi government for preventing the federal agencies from taking any action against Mehta, the founder of Winsome Diamonds, who stands accused of transacting business with the Adani group through several shell companies including one called Monterosa.
“Is the Prime Minister giving protection to criminals like Mehta because he is Adani’s relative?” Shrinate asked at a media conference.
Mehta, his wife Sonia and sons Vipul and Suraj wound up in the UK where he opened a couple of businesses and then acquired citizenship of St Kitts and Nevis — a Caribbean tax haven.
But before the family vanished into thin air, Suraj married Krupa, daughter of Vinod Adani, in 2012.
The elder brother of Gautam Adani has been embroiled in controversy over accusations of funnelling funds through a labyrinth of overseas shell companies to the sprawling business empire of the Gujarat-based tycoon who has flourished under Prime Minister Narendra Modi.
Shrinate wanted to know who had issued a no-objection certificate that allowed the Mehtas to obtain citizenship of St Kitts when a number of cases were pending against him for defrauding banks in India.
The Winsome Diamonds saga dates back to 2008 when several Indian banks and the UK-based Standard Chartered Bank lent bullion to Winsome Diamonds and Jewellery Ltd and a sister concern, Forever Precious, under a 270-day credit facility.
The following year, the banks created a joint working capital consortium to lend more money to the Winsome group. However, by 2013, Winsome started to default on its loans and the family disappeared soon after.
Mehta may have been able to escape from the clutches of the Indian lenders, but the law appeared to have caught up with him in May last year when a UK court issued a World Freezing Order (WFO) to secure assets worth $932.46 million belonging to the Mehta family and also impounded their passports.
This order was issued in relation to a case filed by Standard Chartered Bank which accused the Mehtas of perpetrating a $1 billion fraud by misappropriating the proceeds of bullion that had been advanced to two group companies.
The accusation was that the Mehtas had “laundered and concealed through multiple layers of corporate entities” with the vast majority of the proceeds ending up in entities owned by the fugitive businessman and his family.
The court was told that a British Virgin Island-registered company, Marengo Investment Group Limited, which the Mehtas accepted as their “family-owned company”, had received £163 million. Another entity, Al-Noora FZE based in the UAE, received $650 million. Both Al-Noora and Marengo were subsequently dissolved.
The Mehtas have been trying to wriggle out of the asset freeze and filed a suit in November last year pleading that it should be lifted.
Standard Chartered Bank, however, had insisted that the freeze order should stay until the trial where a final determination of the fraud case is made.
In a 403-page order issued on November 22 last year, Justice Edwin Johnson of the England and Wales High Court (Chancery Division) rejected the Mehtas’ plea — which means the asset freeze will continue till trial.
In March this year, Judge Johnson turned down two other pleas from the Mehtas: the first that the case against them should be heard in India and, second, that they should be allowed to pay only 70 per cent of the legal costs of the claimants (that is, Standard Chartered) for failing in its jurisdictional challenge. The court said the Mehtas should pay the entire legal costs.
Lax response in India
The action in the UK stands in sharp contrast to that in India.
Reports indicate that 15 Indian banks are owed Rs 4,680 crore by Winsome Diamonds and Rs 2,122 crore by Forever Precious Diamonds, the sister concern.
The Indian banks started complaining against Winsome Diamonds in 2013-14. The CBI finally registered a case in 2017.
Shrinate said the CBI and ED did not pursue the case and wondered if they were sleeping only because they found out who he was.
She asked: “What have the CBI and ED done after the big revelations that Mehta continues to invest in the Adani group through shell companies?”
The charge is that the Mehtas have been shovelling funds into the Adani group through a company named Monterosa.
The Hindenburg Research report of January 24 said: “Alastair Guggenbühl-Even, Monterosa’s Chairman and CEO, has significant past connections with a notorious Indian fugitive diamond merchant, Jatin Rajnikant Mehta.”
The Adanis deny all allegations of wrongdoing made in the Hindenburg report.
Guggenbühl-Even has served as a director on at least three separate companies along with Jatin Mehta: Forever Precious Jewellery & Diamonds Ltd, Carbon Accessories Ltd and Revah Corporation Ltd.
At her media conference, Shrinate said: “We all now know the link between Monterosa and Jatin Mehta. Some reports suggest the Mauritius-based shell companies actually own Monterosa and these are the same companies which have invested heavily in the Adani group. We haven’t so far received the answer to the critical question: to whom does the Rs 20,000 crore belong?”
The reference to the sum of Rs 20,000 crore comes from a recent report in the Financial Times which analysed publicly available data and concluded that almost half of the $5.7 billion of foreign direct investment that the Adani group received had come from “opaque overseas entities with connections to the group”.
In its defence, the BJP has blamed the UPA government for permitting banks to provide loans to Mehta and allowing him to flee.
But the Congress has pointed out that the CBI registered a case against him only in 2017 after he had fled the country.
The Mumbai Economic Offences Wing and the Serious Fraud Investigation Office took no action between 2014 and 2017. The BJP came to power in 2014.
The Congress had wondered at that time why the ministry of external affairs and the home ministry allowed them to renounce Indian citizenship on June 2, 2016, even after he was declared a defaulter.